Individual differences in abilities to interpret the internal states of other persons are examined in parents and their young children. How do mothers' abilities in this respect influence their functioning in relation to their children? Is the development of social inferential skills in the child related to mother's abilities and childrearing methods? Mothers' abilities to make appropriate inferences about internal states of others are measured using hypothetical situations involving interpersonal problem solving situations and through structured interactions with their children. Experimental situations involving distress or need in peers and adults are used to assess children's sensitivity to internal states. Mothers in the study differ in psychiatric diagnosis: major depression, minor depression, or normal.